Question 1

The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets.

Accepted Answer

A) True 
 B)False

Question 2

The time period concept states that ________.

Accepted Answer

A)  financial statements can be prepared for specific periods 
B)  all expenses should be recorded when they are incurred during the period 
C)  companies should record revenue when it has been earned 
D)  expenses incurred during a period should be matched against the revenues of the period 
A)  financial statements can be prepared for specific periods 
B)  all expenses should be recorded when they are incurred during the period 
C)  companies should record revenue when it has been earned 
D)  expenses incurred during a period should be matched against the revenues of the period

Question 3

The unadjusted trial balance of Burton Business Services at December 31,2018,and the data for the adjustments follow:
   Adjustment data at December 31 follows:
a.Depreciation for the equipment is $4,000.
b.As of December 31,2018,Burton had performed services for Wilson Company for $3,000.The invoice will be sent on January 5,2019 and payment is due on January 15,2019.
c.On August 31,2018,Burton agreed to provide consulting services to Allen Company for 6 months,beginning on September 1,2018,at $1,500 per month.Allen paid $9,000 on August 31,2018.Burton treats deferred revenues initially as liabilities.
Burton is preparing financial statements for the year ending December 31,2018.
Requirements
1.Journalize the adjusting entries on December 31,2018.
2.Prepare the December 31,2018 adjusted trial balance.Use a proper heading.

Accepted Answer

The answer of The unadjusted trial balance of Burton Business...

Question 4

Financial statements can be prepared from the unadjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following entries would be made because of the matching principle?

Accepted Answer

A)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Salaries Expense } & & 1,000 \
\hline
\end{array}$$ 
C)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Unearned Revenue } & & 1,000 \
\hline
\end{array}$$ 
A)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Salaries Expense } & & 1,000 \
\hline
\end{array}$$ 
C)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Unearned Revenue } & & 1,000 \
\hline
\end{array}$$

Question 6

A company receives payment from one of its customers on August 5 for services performed on July 21.Which of the following entries would be recorded if the company uses accrual basis accounting?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|c|}
\hline \text { Accounts Payable } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|c|}
\hline \text { Service Revenue } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|c|}
\hline \text { Accounts Payable } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|c|}
\hline \text { Service Revenue } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$

Question 7

On November 27,2018,Metro Delivery Service Company signs a contract with Brooklyn Financial Services Company.Metro Delivery Service will provide 3 months of local delivery services for $5,000 per month.Brooklyn pays $15,000 cash to Metro on November 27,2018.Delivery services will begin on December 1,2018.Complete the following requirements for Metro Delivery Services.
(1)Prepare the journal entries for November 27,2018 and December 31,2018 (the end of Metro's fiscal year).Make proper journal entries (omit explanations).Deferred revenues are treated initially as liabilities.
(2)If Metro fails to record the December 31,2018 adjusting entry,what is the effect on net income,income statement account(s)and balance sheet account(s)?
(3)Why is it important for companies to record adjusting entries?

Accepted Answer

(1)
 \[\begin{array} { | r | r | r | r |

Question 8

The adjusted trial balance shows ________.

Accepted Answer

A)  account balances after adjustments 
B)  revenue and expense accounts only 
C)  account balances before adjustments 
D)  balance sheet accounts only 
A)  account balances after adjustments 
B)  revenue and expense accounts only 
C)  account balances before adjustments 
D)  balance sheet accounts only

Question 9

Wentfield Services Company records deferred expenses as expenses when payment is made in advance and deferred revenues as revenues when the payment is received in advance.At the end of the year,Wentfield Services Company makes the necessary adjustments based on accrual basis accounting.On July 1,it paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year.Prepare the year-end adjusting entry on December 31.Omit explanation.

Accepted Answer

None

Question 10

If net income is overstated,equity will be understated.

Accepted Answer

A) True 
 B)False

Question 11

The following Office Supplies account information is available for Nabors Company. $$\begin{array} { | l | r | } 
\hline \text { Beginning balance } & \$ 2,000 \
\hline \text { Office Supplies expensed } & 8,000 \
\hline \text { Ending balance } & 1,000 \
\hline
\end{array}$$ From the above information,calculate the amount of office supplies purchased.

Accepted Answer

A)  $7,000 
B)  $8,000 
C)  $2,000 
D)  $1,000 
A)  $7,000 
B)  $8,000 
C)  $2,000 
D)  $1,000

Question 12

A business hired a repair service to overhaul its plumbing system.The repair service began work on September 15 and completed it on October 15.The business agreed to pay the service $4,000 when the work was completed.As of September 30,the work was 50% complete,and the business made an adjusting entry to accrue repair expense as of the end of September.On October 15,the work was completed,and the repair service was paid in full.Provide the journal entry for the cash payment on October 15.(Ignore explanation).

Accepted Answer

None

Question 13

The revenue recognition principle requires companies to record revenue when (or as)the entity satisfies each performance obligation.

Accepted Answer

A) True 
 B)False

Question 14

The purpose of the adjusted trial balance is to ensure that no errors were made during the adjusting process.

Accepted Answer

A) True 
 B)False

Question 15

Laramie Company signed a contract with a service provider for security services at a rate of $350 per month for the period of January through June.Laramie Company will pay the service provider the entire amount at the end of June.Laramie Company makes adjusting entries each month.During the month of June,it should record total security expense of $700.

Accepted Answer

A) True 
 B)False

Question 16

Improvements,a home improvement magazine,collected $240,000 in subscription revenue on June 30.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the July issue.The company uses the accrual method of accounting.What is the amount of Subscription Revenue that has been earned by the end of December? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number.)

Accepted Answer

A)  $100,000 
B)  $140,000 
C)  $240,000 
D)  $120,000 
A)  $100,000 
B)  $140,000 
C)  $240,000 
D)  $120,000

Question 17

An adjusting entry is completed ________.

Accepted Answer

A)  at the beginning of the accounting period 
B)  at the end of the accounting period 
C)  after all performance obligations are satisfied 
D)  when accounts need to be balanced in the ledger 
A)  at the beginning of the accounting period 
B)  at the end of the accounting period 
C)  after all performance obligations are satisfied 
D)  when accounts need to be balanced in the ledger

Question 18

Which of the following entries would be made because of the matching principle?

Accepted Answer

A)  $\begin{array}{|l|r|l|}
\hline \text { Rent Expense } & 2,500 & \
\hline \text { Rent Revenue } & & 2,500 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Revenue } & 2,500 \
\hline \text { Cash } &&2,500 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Rent Expense } & 2,500 \
\hline \text { Unearned Rent } &&2,500 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|l|}
\hline \text { Rent Expense } & 2,500 & \
\hline \text { Prepaid Rent } & & 2,500 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|l|}
\hline \text { Rent Expense } & 2,500 & \
\hline \text { Rent Revenue } & & 2,500 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Revenue } & 2,500 \
\hline \text { Cash } &&2,500 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Rent Expense } & 2,500 \
\hline \text { Unearned Rent } &&2,500 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|l|}
\hline \text { Rent Expense } & 2,500 & \
\hline \text { Prepaid Rent } & & 2,500 \
\hline
\end{array}$

Question 19

The accounting period used for the annual financial statements is called the fiscal year.

Accepted Answer

A) True 
 B)False

Question 20

The Accumulated Depreciation account is ________.

Accepted Answer

A)  a record of the sum of all the depreciation expense recorded to date for a depreciable asset 
B)  the price quoted to the buyer of a used asset 
C)  a liability account 
D)  the expense account used to allocate the depreciable cost of an asset 
A)  a record of the sum of all the depreciation expense recorded to date for a depreciable asset 
B)  the price quoted to the buyer of a used asset 
C)  a liability account 
D)  the expense account used to allocate the depreciable cost of an asset

The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets.

The time period concept states that ________.

Financial statements can be prepared from the unadjusted trial balance.

Which of the following entries would be made because of the matching principle?

A company receives payment from one of its customers on August 5 for services performed on July 21.Which of the following entries would be recorded if the company uses accrual basis accounting?

The adjusted trial balance shows ________.

If net income is overstated,equity will be understated.

The following Office Supplies account information is available for Nabors Company. Beginning balance \ 2,000 Office Supplies expensed 8,000 Ending balance 1,000 From the above information,calculate the amount of office supplies purchased.

The revenue recognition principle requires companies to record revenue when (or as)the entity satisfies each performance obligation.

The purpose of the adjusted trial balance is to ensure that no errors were made during the adjusting process.

An adjusting entry is completed ________.

Which of the following entries would be made because of the matching principle?

The accounting period used for the annual financial statements is called the fiscal year.

The Accumulated Depreciation account is ________.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 3: The Adjusting Process

The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets.

The time period concept states that ________.

Financial statements can be prepared from the unadjusted trial balance.

Which of the following entries would be made because of the matching principle?

A company receives payment from one of its customers on August 5 for services performed on July 21.Which of the following entries would be recorded if the company uses accrual basis accounting?

The adjusted trial balance shows ________.

If net income is overstated,equity will be understated.

The following Office Supplies account information is available for Nabors Company. Beginning balance \ 2,000 Office Supplies expensed 8,000 Ending balance 1,000 From the above information,calculate the amount of office supplies purchased.

The revenue recognition principle requires companies to record revenue when (or as)the entity satisfies each performance obligation.

The purpose of the adjusted trial balance is to ensure that no errors were made during the adjusting process.

An adjusting entry is completed ________.

Which of the following entries would be made because of the matching principle?

The accounting period used for the annual financial statements is called the fiscal year.

The Accumulated Depreciation account is ________.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters